Maryland’s Anne Arundel County reverses rule on short sale tax

    Looks like Anne Arundel did the right thing and overturned the tax on short sales. From Hometown Annapolis:

    Anne Arundel County has done an about-face on how it charges taxes on short sales of homes.

    Just a week after real estate agents and title lawyers started complaining publicly, the county government is ending its practice of calculating taxes in a way that collected more money.

    The county’s decision is based on an opinion from the state Attorney General’s Office that said the county didn’t have explicit authority to collect the tax in the way that it was doing.

    “We’re going to follow the AG’s opinion,” said Richard Drain, the county controller.

    The opinion was issued yesterday afternoon, and Drain said the change in policy is effective immediately.

    Five short sales on homes had gone through the old process and the county will refund the extra taxes paid. The extra tax totals $4,000 on the five sales combined.

    In a short sale, a home is sold for less than the value of the seller’s mortgage.

    Anne Arundel’s policy was to calculate certain taxes based not on just the sale price, as happens with regular home sales. Instead, the county taxed the sale price plus any amount of the mortgage that was “forgiven” by the lender.

    For example, on a house mortgaged for $300,000 but approved for a sale at $250,000, the county was charging taxes based on $300,000.

    Realtors said the taxes should be based on just the sale price of $250,000.

    Read the rest of the story HERE.

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